What Exactly is a Lease?
A lease is a contract between two parties, the leasing company or “lessor” and the customer or “lessee”, where the lessor acquires equipment that is chosen by the lessee from an equipment supplier that is usually chosen by the lessee, and then the lessor leases the equipment to the lessee for the term specified in the lease contract. The lease may contain no option for lessee to own the equipment at the end of the lease, in which case it is truly a rental agreement, or it may contain an option (the “purchase option”) for the lessee to acquire the equipment by paying the agreed upon purchase price to the lessor.
Leasing can be used to acquire just about any type of equipment, machinery or other capital assets. Leasing can even be used to for computer software.
Tags: capital assets, equipment machinery, lease contract, Leasing, leasing company, lessee, lessor, purchase option
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